Musings - Why splitting Windows is Nadella's first major mistake
Holger Mueller is VP and Principal Analyst for Constellation Research for the fundamental enablers of the cloud, IaaS, PaaS and next generation Applications, with forays up the tech stack into BigData and Analytics, HR Tech, and sometimes SaaS. Holger provides strategy and counsel to key clients, including Chief Information Officers, Chief Technology Officers, Chief Product Officers, Chief HR Officers, investment analysts, venture capitalists, sell-side firms, and technology buyers. Coverage Areas: Future of Work Tech Optimization & Innovation Background: Before joining Constellation Research, Mueller was VP of Products for NorthgateArinso, a KKR company. There, he led the transformation of products to the cloud and laid the foundation for new Business Process as a…...
Read moreOn March 29th Microsoft shared that the head of it's Window team, Terry Myerson, was leaving and as a consequence the Windows team was going to be split up into two large development teams under Rajesh Jha and Scott Guthrie (see Nadella's memo here, kudos for transparency).
Here is what we don't know: Did Myerson quit, or was he compelled to leave as expectations on the Windows progress did not meet the board's / shareholder expectations. Or did he leave knowing his team would be split and not interested in other roles, hanging in there etc. Those are missing pieces that may surface – or not – and change the analysis here.
So why could this be a major mistake for Microsoft and its users? Here are my musings:
Windows was finally 'fixed'. You can't blame Microsoft for not investing into Windows. And with Windows 10 Microsoft had finally fixed practically all the sins of the past, pulverized the skeletons in the closet all coming from the fast paced 90ies, that still had traces in the Windows source code until Windows 10. And Windows 10 has been steadily growing, even though it may have hit a slower pace or temporary backlash (see ComputerWorld here). Yes – Microsoft was no longer on track to get to 1B Windows 10 devices in 2018, but since when does that faze people… all market adoption projections need to be taken with a grain of salt. But with a Windows 7 end of life date in a few years, and when walking into any PC store – it only and always Windows 10 devices, that would have been addressed sooner then later.
Major Platform – with no leader? According to Statcounter (see here), Windows is in a neck to neck race with Android for overall platform leadership. And that's not a fair competition, different platforms, monetization, sales channels, purchase price and and… The real competition that is comparable is Apple's OS X and that's hovering well under 10%... so despite all these 'Hello I am a Mac' advertisements of years past, Apple's OS X hasn't moved up much on Windows 10. Would Apple split OS X? Don't think so. Would anyone split responsibilities of a platform with way over 1B installs up? Everybody wants one, they look for leaders and teams to get them there… And a platform with no leader, typically has ceased to be a platform only a few quarters in. Let's watch the next major Microsoft conference, which is Build in May. I expect some chaperoning by Nadella, and then Jha and Guthrie to merge the messages with their existing and new assets. And then watch for the cracks to appear… first small, then bigger, then visible, then obvious…
Platform Morphing beats Platform Abandonment. You don't split a platform, even when it is old. You renovate it (see e.g. IBM with Z/OS), you re-platform it (see Microsoft with Windows 10), you innovate (see Apple OS X) or you morph it to where it needs to be and where to evolve towards. Nadella is right that in the very long run, the PC is dead. And certainly, the cloud and the edge are showing more growth. But the industry has not come up with an alternative to the PC - yet. You can call the Chromebooks something else than a PC, but the form factor, connectivity is practically the same device. This is where Windows may have to morph, to maybe a browser based OS, and Microsoft has very much the assets (and the ambition) in play with Edge. And a micro Edge browser could very well work on the IoT edge. Wait – we have even have a perfect branding head line – Microsoft Edge for the IoT Edge – with all the good Windows DNA should that IoT edge platform need to get a little more beefier. Wait there is also Windows Server… so morph, position… even "embrace and extend" – remember that? Why no more in 2018?
Warning – Major Brand Implosion. Searched the interwebs for a bit on Windows brand value… with no success. But it must be out there… (please let me know if you find it). What is the #1 brand associated with Microsoft – Windows, then Office. Ask anyone. Why give that up? Yes it maybe old, but so are the affluent aging populations in the 1st world – and they know Windows for their whole computing life time. It may not be the snazziest brand and may need some maintenance… but in the B+ brand area this is just destruction of brand value … again – you morph a brand, you don't… split it, make it disappear (I know Microsoft will of course argue this, but let's watch what happens to the Windows brand in the next 48 months).
MyPOV
Certainly a bold move by Nadella, probably his boldest. I am sure he has major shareholder (aka Bill Gates, Steve Ballmer) support. Both of those two have dedicated decades of their lives to make Windows what it is today. They may know something, that we don't know, and I am happy to correct this blog… when I turn out to be wrong. I can't' imagine Balmer giving Nadella a hard time that he is not moving fast enough to split up Windows... but hey, maybe. But for now, pretty comfortable with the POV… what is yours? Please share!
[April 10th 2018] Needless to say Microsoft wants to stress some points here: Windows remains an important part of Microsoft's future, in combination with the Microsoft 365 offerings. Windows also powers the devices on the "intelligent" edge. Microsoft states that customers have been asking for getting Office, Windows and devices closer to each other for a better experience. Fair enough, make up your mind. 1st data point will be ... Build. Or any major announcements before.
